Lucky Investors Gain Big As M&A Surges In New Year

From ketchup to computers, companies are buying each other again. Is a flurry of LBOs next?

NEW YORK (AP) â¿¿ If stock investing is like playing the lottery, your odds of winning the jackpot just got a little better.

Companies are buying each other at the fastest pace since before the Great Recession. Investors lucky enough to own stock in a company being bought are pocketing big money.

Since November, U.S. companies have announced a dozen purchases worth $3 billion or more in mining, food, technology, airlines and other industries. Stocks of the acquired companies have soared 20 percent or more above where they were trading before the deals were announced.

On Thursday, billionaire Warren Buffett added to the frenzy. His company, Berkshire Hathaway, joined another investment firm to buy all the stock of H.J. Heinz Co. for $23 billion, or $72.50 per share. That was 20 percent higher than the ketchup maker's share price the day before.

A week earlier, another group of shareholders scored. In an echo of the big leveraged buyouts of the boom years, Michael Dell and an investment firm offered to take his publicly traded computer company private for $24 billion, most of that borrowed money. That translates to $13.65 per share, a 25 percent gain for stock owners, but they may get even more. Two big Dell investors are protesting that the offer is too low, raising the possibility of something rarely seen in M&A these days â¿¿ a bidding war.

Investors are watching this deal closely for another reason: They hope it inspires investment firms to attempt other big leveraged buyouts â¿¿ risky takeovers that use lots of borrowed money from banks and bond markets. The Dell deal would be the first large leveraged buyout since before the recession.

"We're finally dusting off the cobwebs," says R.J. Hottovy, a director at Morningstar, a research firm. "It shows that banks are willing to take risks."